The implementation of Europe’s Markets in Crypto-Assets Regulation (MiCA) on June 30 has caused a significant shift in the stablecoin market. With the demand for compliant stablecoins on the rise, Circle’s USDC has emerged as a primary beneficiary of this trend. According to a report by French blockchain analytics firm Kaiko, non-compliant stablecoins currently make up 88% of the total stablecoin volume. However, the introduction of MiCA is expected to change this dynamic, as market makers start favoring compliant stablecoins over non-compliant alternatives.
In response to the MiCA regulation, several prominent crypto exchanges such as Binance, Bitstamp, Kraken, and OKX have already imposed restrictions, delisting non-compliant stablecoins like Tether’s USDT for their European customers. This has led to a surge in the demand for compliant stablecoins, with USDC leading the way. Kaiko’s estimates show that USDC has experienced a significant increase in weekly trading volume, reaching $23 billion in 2024, up from $9 billion in 2023 and $5 billion in 2022.
Circle, the fintech firm behind USDC, recently obtained an e-money license from France’s Autorite de Controle Prudentiel et de Resolution (ACPR), making it compliant with stablecoin provisions under MiCA. This move solidified Circle’s position as the first global stablecoin issuer to achieve compliance with the new regulatory framework in Europe. As a result, both USDC and Euro Coin (EURC) tokens are now being issued in the EU in full compliance with MiCA.
Centralized exchanges (CEXs) have played a crucial role in increasing USDC volumes over the past year. Binance’s decision to re-list USDC in March 2023 caused the stablecoin’s market share on CEXs to soar from an average of 60% to over 90% across all exchanges. Additionally, Bybit’s introduction of zero-fee USDC trading in February 2023 further contributed to the growth in USDC volumes.
The rise in USDC’s demand can be attributed to its increasing use in settling perpetual futures contracts. The proportion of Bitcoin perpetual denominated in USDC on Binance and Bybit has surged from 0.3% to 3.6% since January. Similarly, for Ethereum perpetual, the trade volume in ETH-USDC has grown from 1% to over 6.8% in the same period.
The growing regulatory compliance requirements and the increasing demand for transparent and regulated stablecoins have positioned USDC as a dominant player in the stablecoin market. With its market share on the rise and a strong presence on centralized exchanges, USDC is expected to continue its upward trajectory in the cryptocurrency industry.
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